Page 140 - DCAP601_SIMULATION_AND_MODELING

Simulation and Modelling

Notes Present cost of unloading [for three operatives] = 3 x 20 per hour = ` 60 per hour.

Traffic intensity = P = lambda/mu = 8/10 = 0.80
Average queue length = P2/1 - P = (0.80){+2} = 0.80 x 0.80 / 1 - 0.800.20 = 3.2
Opportunity cost per unit time = 60 x 3.2 = ` 192
Actual cost of current year = 60 x 3.2 = ` 192
Total cost of current year = opportunity cost + actual cost = 192 + 192 = ` 384
Proposal: If crew is doubled, service rate = mu = 18 per hour
Cost of unloading [for six operatives] = 6 x 20 = ` 120 per hour
Traffic intensity = P lambda/mu = 8/18 = 4/9 = 0.44
Average queue length = P2/1-P = (0.44){+2} /1-0.44 = 0.44 x 0.44/0.56 = 0.35
Opportunity cost = 60 x 0.35 = ` 21
Actual cost = 120 x 0.35 = ` 42
Total cost = 21 + 42 = ` 63
Thus the total cost of by employing second crew is less than the single crew. Hence, it is
worthwhile employing the second crew.

Note: Decision to employ second crew will not change even if we consider total salary for
crew is taken as ` 20 per hour.
Simulation

SHREE Lakshmi Finance Corporation is an investment company.
The management of the company wants to study the investment in a project based on the
following three factors: a) market demand, b) profitability, and c) amount of investment
required.
Table 8

Table 9

Contd...

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